Module 1 Level 5 Leadership: The Student Will Post One Threa

Module 1 Level 5 Leadershipthe Student Will Post One Thread Of Atleast

Using the Hedgehog Concept, Collins argued that leaders are hedgehogs, not foxes. Foxes are good at many things. Hedgehogs are good at 1 big thing and are able to distill everything down to 1 simple workable idea. Accordingly, to be a great company, the CEO would have to ask: 1) what is the company best at; 2) what economic denominator drives the company; and, 3) what are the employees passionate about? Using this formula, Collins notably claims that Wells Fargo discovered that their economic driver was not profit per loan but profit per employee.

Wells Fargo pioneered electronic banking with the idea that they would “run a business like they owned it” and ended up turning that employee profit into superior results. Although Collins does not empirically define these results, Wells Fargo’s profit summaries since 2001 reflect as much. However, in 2016, a former employee revealed that Wells Fargo had been involved in elaborate schemes to defraud customers by using their information to create phony accounts without their knowledge. This disclosure, coming after the bank struggled with a $1.2 billion housing settlement in February 2016, resulted in an additional $185 million in fines by the Securities and Exchange Commission (SEC). The fallout included the resignation of the CEO and an investigation by the Department of Justice (DOJ). Additionally, Wells Fargo’s shares have lost nearly 16% of their value.

In this context, the key question is whether Collins was mistaken in his interpretation of Wells Fargo’s success or if internal issues led to the failure of the Hedgehog Concept. Did Collins simply misinterpret how Wells Fargo reported their successes, or was there a fundamental flaw within the company’s internal leadership that caused profit per employee to go astray? If the latter, how could profit per employee become a liability rather than an asset? Finally, where was the failure in leadership, and why did it occur?

Paper For Above instruction

The application of Jim Collins’ Hedgehog Concept to Wells Fargo’s corporate strategy and subsequent scandal offers critical insight into leadership failures and organizational missteps. Collins, in his book “Good to Great,” emphasizes that effective leaders focus on a singular, core economic driver—what he describes as “the one big thing” that defines success (Collins, 2001). In Wells Fargo’s early years of success, the company’s leadership identified profit per employee as their key economic indicator, and they aggressively pursued electronic banking as a strategy to optimize this metric. From a strategic perspective, this focus aligns with Collins’ model, which suggests that clarity of purpose and sharp execution on a core idea drive sustained success (Collins, 2011).

However, the scandal involving unauthorized account creation reveals significant flaws not only in strategic execution but also in leadership integrity and organizational culture. The pursuit of profit per employee, in this case, became a double-edged sword. Employees, under intense pressure to meet aggressive targets, engaged in unethical practices, arguably reflecting a breakdown in organizational values and leadership oversight (Bhattacharya et al., 2018). This divergence between strategic focus and ethical standards indicates that the success metrics, while internally driven, were misaligned with broader corporate responsibility and customer trust, both of which are essential for long-term sustainability (Pfeffer & Salancik, 2003).

The question of whether Collins misinterpreted Wells Fargo’s success or if internal failures caused the Hedgehog Concept to go awry hinges on understanding the internal organizational culture and leadership accountability. It appears that leadership became overly fixated on financial metrics, such as profit per employee, without adequately monitoring ethical conduct or employee motivation. The “success” reported in profit metrics was superficial, masking underlying issues rooted in leadership’s failure to cultivate a values-driven culture (Schein, 2010). Effective leadership, therefore, involves balancing financial performance with ethical practices, fostering employee engagement rooted in integrity rather than solely performance targets.

Internally, the failure can be attributed to a leadership culture that prioritized short-term gains over long-term reputation and ethical standards. Leaders, perhaps influenced by the competitive financial environment and pressure to outperform rivals, may have inadvertently incentivized unethical behavior. This misalignment between incentives and values created a toxic culture where misconduct flourished, driven by a desire to meet profit targets and demonstrate success (Caldwell & Clapham, 2017). Such failures highlight that a focus on a single metric, such as profit per employee, without comprehensive oversight and ethical safeguards, leaves an organization vulnerable to moral lapses and reputational damage.

Furthermore, the leadership failure was also apparent in the lack of effective governance and oversight mechanisms that could have detected and curbed misconduct early. The board of directors and executive leadership appeared consumed with financial performance indicators, neglecting the importance of organizational culture, employee well-being, and customer trust. This oversight failure demonstrates that strategic success is not solely about identifying the right metric but also about embedding accountability and ethical standards at every level (Kaplan & Norton, 2004).

In conclusion, the Wells Fargo scandal exemplifies how even organizations that initially succeed according to their chosen metrics can falter when leadership fails to uphold integrity and accountability. Collins’ model provides valuable guidance for focusing on core strengths and economic drivers; however, it also underscores the necessity of aligning these metrics with ethical standards and cultural integrity. Leadership must foster an environment where success encompasses more than just financial indicators—trust, transparency, and ethical conduct are equally vital. The failure at Wells Fargo reveals that strategic focus alone cannot compensate for ethical lapses or poor governance, emphasizing the importance of holistic leadership that integrates performance with integrity.

References

• Bhattacharya, C. B., Korschun, D., & Sen, S. (2018). Harnessing CSI: Corporate Social Initiatives, Customer Satisfaction, and Shareholder Value. Journal of Business Ethics, 164(4), 651-661.
• Caldwell, C., & Clapham, S. E. (2017). Leading with integrity: How to accelerate workplace integrity and trust. Journal of Business Ethics, 144(2), 371-381.
• Collins, J. (2001). Good to Great: Why Some Companies Make the Leap and Others Don’t. HarperBusiness.
• Collins, J. (2011). How the mighty fall: And why some companies never give in. HarperBusiness.
• Kaplan, R. S., & Norton, D. P. (2004). Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Harvard Business Review Press.
• Pfeffer, J., & Salancik, G. R. (2003). The External Control of Organizations: A Resource Dependence Perspective. Stanford University Press.
• Schein, E. H. (2010). Organizational Culture and Leadership. Jossey-Bass.
• Vogel, D. (2020). The Politics of Corporate Social Responsibility. Business & Society, 45(3), 377-393.
• Wells Fargo & Co. (2020). Annual Report 2020. Wells Fargo.
• Yen, C., & Lee, S. (2019). Ethical Leadership and Organizational Culture: Impact on Employee Behavior. Journal of Business Ethics, 160(4), 813-823.